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Jared Meyer interviewed former San Diego City Council member Carl DeMaio on March 24 on the subject of what can be done to solve the growing problem of the state and local pension debt crisis. DeMaio now chairs Reform California, a political action committee seeking to place pension reform on the ballot statewide.

JM: Could you describe the pension reforms that you instituted in San Diego and what they accomplished?

CD: The public sector government pension programs are Ponzi schemes—there’s no better way to describe them. The formulas and the benefits used are unsustainable, and the financial forecasts and models use erroneous numbers and assumptions. At the end of the day, taxpayers will be left holding the bag with fewer services, higher taxes, and billions in debt.

What we did in San Diego was shut down that failed system and moved public sector retirement funds to 401(k)s. These 401(k)s shield taxpayers from losses and force politicians to pay for bills in the year in which services were provided. With a 401(k), employees pay their own contributions in that year. This means no hidden debt. Defined contribution plans also provide for a public sector worker’s retirement that’s benchmarked against what the local labor market provides private sector employees—no better, no worse.

JM: How large is this problem right now if we’re looking at the entire United States?

CD: This is a huge problem in three ways.

No. 1, we’re talking billions of dollars in debt, and it’s not just the official debt. When you true up the numbers with realistic assumptions, you find that the amount of debt is far greater than government officials are willing to admit. In California, the official number is around $150 million. But, with realistic return on investment assumptions and mortality rates, you find that the real number is closer to $500 billion—half a trillion dollars—just for California alone. In San Diego, they say the debt is $2 billion. Well it’s more like $4 billion.

Second, to pay the debt service, you are seeing services cut and taxes and fees increased. This unfunded liabilities problem is having an immediate effect on the quality of life, and it will continue to have a growing negative effect as the costs rise.

Third, we’re talking about retirement security that is not going to exist. You will have systems that go bankrupt, and, when the Ponzi schemes collapse, who will be responsible? What these unions are doing to numerous members is unconscionable. The union bosses know that they’re going to get their fat checks. Their attitude is “who cares about what’s going to happen to the next generation?”

Well, I care. And I think that taxpayers want affordable pensions for government employees to protect the quality of their services, but they also want to know that we treat our employees properly and that they have retirement security.

For all the resources our federal government has provided to help Americans make wiser energy decisions, most Americans do not use the EPA’s many certifications, online tools, and calculators (which include ENERGY STAR certification and the “Home Energy Yardstick”). When it comes to doing what is right, such as using energy more efficiently, eating healthy, or exercising regularly, the intention is there for most people—but there is a large gap between intention and action. Acting on positive intentions is difficult, and people often seek outside help to do so.

Opower, a publicly-held, Virginia-based Software-as-a-Service company, offers this sort of outside help. The company’s Chief Scientist is Arizona State University Professor Robert Cialdini, one of academia’s most well-known social psychologists. Cialdini authored a 1984 book on persuasion titled Influence, which showed targeted tips for persuading the public to comply with requests from salespeople, recruiters, and fundraisers. Opower has put recent behavioral economics research into place, and consumers’ energy use during the hottest days of summer fell as a result. These sorts of private sector “nudges” are the future of energy efficiency.

In the summer of 2014, Opower teamed up with utility firm Green Mountain Power and a program called Efficiency Vermont. The goal was to assess whether peer pressure could nudge households into consuming less electricity on hot summer days. Efficiency Vermont and Green Mountain Power identified “Peak Event Days” in the summer when energy use was expected to be exceptionally high. Prior to such days, the two companies notified customers about the upcoming hot days, providing them with no-cost tips for reducing their energy use.

The nudge came when, the day after the Peak Event Days, customers received e-mails from Opower telling them how much they had cut back on their electricity use, as well as how they compared to the average household reduction in their neighborhoods. If a household used less energy than average, it received a smiley face emoticon. If a household used more energy than average, it instead received a frowny face emoticon. Opower used this simple system of neighborhood-level peer pressure and competition in an attempt to incentivize more efficient energy use. This tactic led to positive results as Opower, Green Mountain Power, and Efficiency Vermont reported that electricity demand dropped by as much as five percent on last year’s hottest summer days.